Privatization, Efficiency and the Public Interest

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Michael AbelsOctober 9, 2015

Analyzing privatization’s impact requires public administrators to consider a fundamental value that often has been sacrificed in the quest to reduce the cost of government. The question? How can the drive for efficiency through privatization negatively impact ethical values, including those outlined in ASPA’s own code of ethics? In particular, the code’s first tenet states that public administrators must serve the public interest while the fourth instructs us to strengthen social equity.

Heavily influenced by capitalism, U.S. public administration historically has treated efficiency as a principal value. In the 1980s, efficiency was incorporated as an overriding value by a political philosophy that emphasized individualism as a paramount value at the expense of the state. For 35 years, this philosophy—an anti-tax, anti-government agenda—has dominated the nation’s political leadership. Supporting this political movement was an administrative paradigm that called for individualizing services, viewing citizens as customers and reducing cost by focusing government’s mission solely on setting policy. The primary vehicle is privatization of public services. These principles, incorporated in the “reinventing government” model, have served as a foundation for American public administration.

Today, we experience the negative outcomes of this movement. The U.S. Justice Department’s 2014 report on the operations of the Ferguson, Missouri police department serves as a clarion call for public management. It concluded that prioritizing revenue generation over enhanced community safety was an aberrant practice of one city. However, the conclusion means much more to the profession of public administration. The drive to generate revenue by any source other than taxation is not an outlier in local government finance. It is a direct outgrowth from the notion that privatization is a primary tool for maintaining low taxes. As conservative columnist Michael Gerson wrote earlier this year, some municipalities squeeze money from citizens through fines and fees because they want to spend money without the inconvenience of taxation. He noted that this causes the burden of supporting government to fall heaviest on those with the least ability to pay.

Public administrators must reassess the tools we have implemented to make government more efficient. Has reinventing government negated our proclaimed values of advancing the public interest and strengthening social equity? Accepting as fact that privatization makes government services more efficient, does efficiency define the keystone attribute of the public interest?

Another outcome of this era is that public administrators have become inculcated with the conviction that taxes must not be the mechanism to fund new or increased public services. To comply with this philosophy, we innovatively design new forms of privatization with fees targeted toward those who receive distinct benefit from a service.

As professional managers, we encourage innovative methods for financing community development. Gated communities and community development districts may offer new techniques for financing infrastructure and community services. But, they exacerbate the sense of individualism and the attitude that “I will take care of mine.” A “you take care of yours” philosophy is sweeping our local communities and destroying government’s focus on the public interest.

Also seen in the drive for efficiency is increased privatization of public services and paying for them through user fees that supplant shared responsibility where all pay through general taxation but—because of need—some parts of the community may benefit more than others.

With the increase in U.S. income inequality, the privatization movement has troubling dimensions. Wealthy individuals assume government’s responsibility by contracting for private services in cities that do not have the resources to deliver them in a way that satisfies those individuals. David Amsden this year reported in The New York Times Magazine that a New Orleans entrepreneur paid for private police to supplement city public safety and private sanitation crews to service the district where he lives. This may seem similar to a service enhancement supported through a community development district, but it is much different. Where the former are paid for by taxes and targeted at community identified deficiencies, in this case one individual decides to address service deficiencies in a small area of personal concern to him. Public services contracted through wealthy individuals may become the catalyst that further balkanizes our communities into distinct economic zones.

Privatization of public services is steadily replacing traditional government-provided services. As a profession, we must ask whether the value of reducing the cost of government a superior value to that of advancing the collective welfare of the citizens we serve. What is the public interest? Is it primarily reducing the size and cost of government? What does the first tenet of ASPA’s code of ethics demand and what does “advancing the public interest” mean to our field?

Author: Michael Abels is a lecturer in the School of Public Administration at the University of Central Florida. He served as city manager for cities in Florida and Ohio. He can be reached at [email protected].

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2 Responses to Privatization, Efficiency and the Public Interest

I think it’s fine to remind public administrators when they have their citizen hat on that they may wish to think about social equity, income inequality, and similar matters. However, I think this is not good advice for practicing public administrators. Public administrators must carry out the laws that are assigned to them. They must obey the code of conduct for their organization not the ASPA code of conduct. When discretion is called for, the administrator needs to look to his superiors to see what the current value emphasis may be. It may be on cost cutting; it may be on quality (including very strict compliance will all laws and regulations), or it may be on customer service. In my experience, these are the values that administrators typically have to balance. They are always in conflict because administrative resources are scarce. The code of conduct for federal employees sternly warns against using your position for private enrichment. Beyond, that there is no guidance on what values may be appropriate. If you cited the ASPA code of conduct as a basis for a decision, you might get yourself into trouble. Your superiors might say the ASPA code is not our code at this agency and we (political appointees) will decide what the current value emphasis will be.

Thank you for this commentary. I like efficiency as much as the next person, but it is not a God upon whose altar everything else of value must be sacrificed. As an open government advocate, a major problem with privatization has been the removal of access to information formerly available under FOI and similar provisions. It is good to see that someone else is also a THINKER who has not swallowed the dominant (corporate) ideology.